CEPALCO eyes lower rates with new RE power plants

May 26, 2014

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The electric distribution utility serving 69 barangays of Cagayan de Oro and the municipalities of Tagoloan, Villanueva and Jasaan in Misamis Oriental is eyeing lower generation costs from three of its embedded renewal energy power plants to reduce its total generation charge.

 

Engr Richard Ratunil presents CEPALCO's rate reduction applications

 

Engr. Richard S. Ratunil, energy compliance officer for the Cagayan Electric Power and Light Co. (CEPALCO) disclosed in a May 24 briefing to energy stakeholders at a local hotel that the distribution utility (DU) has filed  four rate applications with the Energy Regulatory Commission (ERC) which would in effect reduce its average distribution charges.

 

The ERC would conduct the hearings for the four cases over the next three days starting Tuesday, May 27 at the CEPALCO Corporate Office at 33 Toribio Chaves Street.

 

First is its annual rate translation for 2015 which seeks ERC approval to adjust the distribution charges for each type of customer.

 

“The new rate will be applicable for the period July 2014 to June 2015 (Regulatory Year 2015) and has been filed pursuant to the timelines prescribed in the Rules in Setting Distribution Wheeling Rates (RDWR),” Ratunil said.

 

2015 is the last year of the third regulatory reset of the DU and would reduce its maximum average price from P1.2014 per kilowatt hour (/kWh) in 2014 to P1.1406 in 2015 for a five percent reduction of P0.0608/kWh.

 

Once approved, this would reduce electric rates across the franchise area as follows:  Streetlight       (0.070; Residential (0.13); Commercial (0.12); Industrial (0.07); and Bulk Power (0.06).

 

The next three applications cover the DU’s power supply agreements (PSE) with three of its embedded power generators. Embedded generators are power plants located within a DU’s franchise area which supply power directly to it without passing through the transmission network of the National Grid Corporation of the Philippines (NGCP).

 

Cepalco solar power plant

 

Its PSA with Kirahon Solar Energy Corporation (KSEC) covers a 10MW Solar PV power plant in Kirahon, Villanueva which was signed November 22, 2013 and would start commercial operations by the 1st quarter of 2015.

 

Another application covers amendments to CEPALCO’s PSA with Bubunawan Power Corporation (BPC) for its 7MW hydroelectric power plant (HEP) in Baungon, Bukidnon.

 

“The existing approved rate is pegged at the landed rate of the National Power Corporation (NPC) so as not to displace cheap NPC hydro,” said Ratunil.”However, it is no longer applicable because of NPC’s insufficient supply for new loads so adjustments are needed to adjust energy charges corresponding to actual cost of power plant.”

 

Another application covers the amendment to CEPALCO’s PSA with sister company Minergy Energy Systems for its 8MW Cabulig HEP in Claveria, Misamis Oriental.

 

“The Rate impact of three renewable energy (RE) projects is +PhP 0.06/kWh but will lover the generation cost in the entire CEPALCO franchise area since it would displace our more expensive MINERGY Bunker C plant and reduce total generation cost from P4.3015/kWh to 4.1853 or a reduction of 0.1162/kWh,” explained Engr. William U. Lim, senior vice president, Minergy Energy Systems.

 

Lim said the adjustment of the Capital Recovery Cost based on actual project cost is a allowed under ERC approved PSA of CEPALCO with Minergy.

 

Ratunil said CEPALCO has been experiencing an unprecedented five percent average load growth for the past 10 years. Should this continue, the DU would need an additional power supply of 101MW over what it now has to accommodate new customers.

 

Peak load within the DU’s franchise area is expected to double from 141MW (2013) to 281 MW in 2018 and it is now scouting for additional power supply next year. Among the options now being evaluated are the coal fired power plant of Therma South Inc. in Davao City, the DOE’s modular genset program, the suspended Interim Mindanao Electricity Market and  Kirahon Solar Energy Corp.

 

“We want to take care of the energy requirements of our service area especially considering the growth is really that fast,” said Marilyn A. Chaves, senior manager for customer and community relations. “We are also working on a power supply agreement with Therma South, and also sourcing from our sister company Minergy Kirahon Solar Plant. Hopefully the 10MW will be available by early next year, plus Cabulig. We are making sure in the next few years we can supply the needs of our service areas.”

 

Visitors checking out a solar panel in Cepalco's Solar Power Plant

 

Last July 2011, CEPALCO cut its power rates by an average of five centavos per kilowatt hour

and has continued to reduce it until 2014 for a cumulative total of 20-centavo cut per kilowatt hour over four years. The cut is equivalent to a P10 reduction in the monthly power bill of the average 200-kilowatt hour consumer household starting July 2011, P20 in 2012, P30 in 2013 and P40 in 2014.

 

 

-I N D N J C-

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